Retailing

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Retailing Wholesaling

• Chapter 13

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Top 10 Retailers in America
Change (00-01)
Sales (in billions)
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2
3
4
5
6
7
8
9
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http//www.stores.org/archives/2001top100_1.html
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What is Retailing?

• Retailing - Includes all the activities Involved
  in Selling Goods or Services Directly to Final
  Consumers for Their Personal, Non-business Use.
• Retailing can be done in stores (store retailing)
  or out of a store (nonstore retailing) such as

• Direct mail

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Top 10 Internet Retailers
US Sales
http//www.stores.org/eng/archives/00top100int_1.h
tml
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Classification of Retailing
Amount of Service Self-Service, Limited-Service
and Full-Service Retailer
Product Line Length and Breadth of the
Product Assortment
Relative Prices Pricing Structure that is Used by
the Retailer
Retail Organizations Independent, Corporate, or
Contractual Ownership Organization
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Classification of Retailing Amount of Service
Self-Service Retailer Provide Few or No Services
to Shoppers
Limited-Service Retailers Provide Only a Limited
Number of Services to Shoppers
Full-Service Retailers Retailers that Provide a
Full Range of Services to Shoppers
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Classification of RetailingProduct Line (Tab.
13.1)
Store Description
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Classification of RetailingProduct Line (Tab.
13.1)
Store Description
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Classification of RetailingRelative Prices
Higher Prices and Offer Higher-Quality Goods and
Superior Customer Service
Regular Prices and Offer Normal-Quality Goods
and Average Customer Service
Low Prices and Offer Lower-Quality Goods and
Little Customer Service
Catalog Showrooms
Discount Stores
Off-Priced Retailers
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Classification of RetailingRetail Organization
Corporate Chain
Merchandising Conglomerates
Voluntary Chain
Retailer Cooperatives
Franchise Organizations
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Retailer Marketing Decisions (Fig. 13.1)

• Retailer
• Marketing Mix
• Product and service assortment
• Prices
• Promotion
• Place (location)

• Retailer Strategy
• Target Market
• Retail Store Positioning

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Product Assortment and Services Decisions

• Product Assortment
• Width and Depth of Assortment
• Quality of Products
• Product Differentiation Strategies

Services Mix Key Tool of Non-price
Competition for Setting One Store Apart
From Another

• Stores Atmosphere
• Physical Layout
• Feel That Suits the Target Market
• and Moves Customers to Buy

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Retailers Price, Promotion, Place Decisions
Price Decisions Target Market, Product Service
Assortment, Competition
Promotion Decisions Using Advertising, Personal
Selling, Sales Promotion, Public Relations,
Direct Marketing to Reach Customers
Place Decisions Shopping Centers, Central
Business Districts, or Power Centers, or Online
Shopping
Location, Location, Location!
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The Future of Retailing
New Retail Forms and Shortening Retail Lifecycle
Growth of Non-store Retailing
Increasing Intertype Competition
Rise of the Megaretailer
Growing Importance of Retail Technology
Global Expansion of Major Retailers
Retail Stores as Communities or Hangouts
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The Wheel of Retailing
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ELECTRONIC COMMERCE

• DEFINITION
• Exchange of information, goods, service, and
  payments by electronic means.

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History of E-Commerce

• E-commerce actually began in the 1970s when
  larger corporations started creating private
  networks to share information with business
  partners and suppliers. This process is called
  Electronic Data Interchange (EDI).
• Prodigy was running text ads and selling flowers
  in the early '80s. The first documented Online
  sale in 1994 was what?
• A CD

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E-Commerce Today

• Some major product categories have paved the way
• travel services (5.95 billion in 1999 sales),
• computer hardware and software (5.8 billion),
• books (1.7 billion),
• gifts and flowers (730 million),
• music (540 million), and
• apparel and footwear (460 million),
• (eMarketer in Business 2.0 Jan 2000).

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E-Commerce Services Today

• In 1999, the online market size for business
  services was estimated at 22 billion.
• Primary service categories include
• financial (7.3 billion, 1999),
• professional (4.4 billion),
• administrative support (3.9 billion),
• corporate travel (5 billion), and
• telecommunications (1.5 billion).
• By 2003, Forrester Research predicts that online
  services will represent nearly 8 percent of the
  overall sector hardly a drop in the bucket.

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Future of E-Commerce

• eMarketer, an Internet technology (IT) research
  and reporting firm, estimates that the dollar
  figure for e-commerce will rise from
  approximately
• U.S. 18 billion in 1998 to
• U.S. 294 billion in 2002. US
• Or maybe 184 billion by 2004.
• (Forrester, Business 2.0 Jan 2000)
• In Europe, consumers' internet purchases will
  jump from
• US 2.9 billion in 1999 to
• US 174 billion in 2005.
• Online business-to-business e-commerce is
  projected to speed past 1 trillion in annual
  revenue by 2003

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Future Trends to Watch in E-Commerce

• Women take control. Women make or influence 80
  percent of household sales in the United States,
  according to WomanTrend, despite the fact that
  they make up 51 percent of the population.
• The untapped get tapped. Two highly touted
  markets 509 million health and beauty, and 513
  million grocery still lag behind expectations.
• More "click and mortar." Traditional retailers
  Circuit City, Crate and Barrel, Sears, Toys R Us,
  Wal-Mart, and Federated Department Stores missed
  the boat in 1995 and 1996, but rest assured they
  "get it" now, and are attempting re-entry, this
  time around with more money and smarts. Watch
  out.

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Still a Long Way To Go

• Andersen Consulting and Forrester Research both
  show shopping cart abandonment rates of 25.
• E-commerce still accounts for less than 1 of
  total retail sales
• Pure plays are struggling to maintain cash flow
  and are either
• Folding
• Cutting back
• Being bought at cheap prices

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Security Issues are Important
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Discussion Connections

• Online retailers provide an alternative to
  shopping the old fashioned way.
• Discuss the differences in shopping for books and
  music at www.Amazon.com vs. Barnes Noble
  Booksellers.
• Discuss the differences in shopping for groceries
  at www.peapod.com vs. your local grocery store.
• Which do you prefer and why?

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What is Wholesaling?

• All the activities involved in selling goods and
  services to those buying for resale or business
  use.
• Wholesaler - those firms engaged primarily in
  wholesaling activity.
• Wholesalers buy mostly from producers and sell
  mostly to
• Retailers,
• Industrial consumers, and
• Other wholesalers.

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Why are Wholesalers Used?

• Wholesalers are Often Better at Performing One or
  More of the Following Channel Functions

Management Services Advice
Selling and Promoting
Market Information
Buying and Assortment Building
Wholesaler Functions
Bulk Breaking
Risk Bearing
Financing
Warehousing
Transportation
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Types of Wholesalers
Merchant Wholesaler Independently Owned Business
that Takes Title to the Merchandise it Handles.
Brokers/ Agents They Dont Take Title to the
Goods, and They Perform Only a Few Functions.
Manufacturers Sales Branches and
Offices Wholesaling by Sellers or Buyers
Themselves Rather Than Through Independent
Wholesalers.
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Wholesaler Marketing Decisions (Fig. 13.1)

• Wholesaler
• Strategy
• Target Market
• Service Positioning

• Wholesaler
• Marketing Mix
• Product and service assortment
• Prices
• Promotion
• Place (location)

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Trends in Wholesaling
Consolidation within the Industry is Reducing
of Wholesalers
Distinction Between Large Retailers and
Wholesalers Blurs
Wholesalers Will Continue to Increase the
Services Provided
Wholesalers Are Beginning to Go Global